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Rebuilding the global economy with trust

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Rebuilding the global economy with trust 1

 

By Margaret Franklin, CFA, President and CEO, CFA Institute

Many of us remember the harsh challenges brought on by the great recession. But today, unlike the financial crisis, the challenges we face result from one omnipresent factor, COVID-19. Though not the “fault” of our profession, our industry still faces immense pressure during these times of market volatility as the stewards of our clients’ investments. Trust in our institutions is surely being put to the test now. And we think trust will be a key element in rebuilding the global economy.

Despite the significant role we play in the economy and in helping our clients’ achieve financial security, a trust gap exists in our industry. Simply put, a delta – literal and figurative – stands between what clients expect and what investment advisers actually deliver.

CFA Institute recently published the fourth edition of our global Investor Trust Study, which shows that the proportion of retail investors who say that their adviser ranks as their most trusted source of advice lags. This trust gap should be deeply concerning to the investment advisory industry. Given that close to 80% of CFA charterholders predict a slow to stagnant global recovery in the short term, before eventually picking up in the medium term, advisers should be at the forefront, guiding their clients through this volatility. If we are to rebuild clients’ financial security through what our members see as a “hockey stick-shaped” recovery, we need to mitigate the trust gap between investors and advisers.

The foundation of sound investment decision-making is built on trust; it remains the bedrock on which financial relationships and transactions occur. Yet the essential, enduring feature of trust that may be overlooked is that two sides of the relationship exist: the client’s willingness to trust and the adviser’s (and, by proxy, his/her firm’s) worthiness of trust.

The fundamental question that we need to be asking ourselves at this time is: what does it take for someone to put their savings at risk and trust someone else to manage their wealth?

One clue: our Trust Study found that credibility combined with professionalism equates to increased trust and value. Advisers should therefore pursue ongoing professional learning and also obtain relevant credentials to deepen the bonds of trust.

Our Trust Study also noted that information remains essential for building trust. Fees and costs represent one of the most important areas of transparency and information for investors. Eighty-three percent of retail investors and 75 percent of institutional investors agree that one of the key factors in creating a trusted relationship is full disclosure of fees and other costs. The less an investor feels informed, the less they trust the financial system.

Further, while technology has been seen as a looming dark cloud by some in the investment management industry – viewing financial technology and artificial intelligence as threats to job security – our Trust Study showed that advisers should embrace these advancements. Innovation and technology scored as trust enhancers. Consider the opposite: would an investor be likely to trust a firm with outdated technology?

Investment advice is still preferred to come from a human source; economic intuition and experience are what investors truly value in a financial adviser. Coupling human advice with the benefits of leading-edge technology leads to more trust.

We also found that an investor’s desire for influence is growing and provides opportunities for the investment industry to strengthen trust. One specific way to create influence for clients is to build customized products that integrate investor values. Seventy-six percent of institutional investors and 69 percent of retail investors report an interest in ESG investing. Two-thirds of institutional investors think the growth of ESG investing has increased trust in the financial services industry. Opportunities to align these interests should inform the product offerings of advisers.

All black swans are not born equal, and this pandemic caught many people off guard. Now more than ever, we need to be able to bring all our skills to bear in a way that helps investors feel more confident about the future – and their financial futures. And that starts with trust. Investment professionals who understand and navigate the layers of investor trust will be better equipped to serve their clients and demonstrate how the investment industry can better serve society.

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Australia says no further Facebook, Google amendments as final vote nears

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Australia says no further Facebook, Google amendments as final vote nears 2

By Colin Packham

CANBERRA (Reuters) – Australia will not alter legislation that would make Facebook and Alphabet Inc’s Google pay news outlets for content, a senior lawmaker said on Monday, as Canberra neared a final vote on whether to pass the bill into law.

Australia and the tech giants have been in a stand-off over the legislation widely seen as setting a global precedent.

Other countries including Canada and Britain have already expressed interest in taking some sort of similar action.

Facebook has protested the laws. Last week it blocked all news content and several state government and emergency department accounts, in a jolt to the global news industry, which has already seen its business model upended by the titans of the technological revolution.

Talks between Australia and Facebook over the weekend yielded no breakthrough.

As Australia’s senate began debating the legislation, the country’s most senior lawmaker in the upper house said there would be no further amendments.

“The bill as it stands … meets the right balance,” Simon Birmingham, Australia’s Minister for Finance, told Australian Broadcasting Corp Radio.

The bill in its present form ensures “Australian-generated news content by Australian-generated news organisations can and should be paid for and done so in a fair and legitimate way”.

The laws would give the government the right to appoint an arbitrator to set content licencing fees if private negotiations fail.

While both Google and Facebook have campaigned against the laws, Google last week inked deals with top Australian outlets, including a global deal with Rupert Murdoch’s News Corp.

“There’s no reason Facebook can’t do and achieve what Google already has,” Birmingham added.

A Facebook representative declined to comment on Monday on the legislation, which passed the lower house last week and has majority support in the Senate.

A final vote after the so-called third reading of the bill is expected on Tuesday.

Lobby group DIGI, which represents Facebook, Google and other online platforms like Twitter Inc, meanwhile said on Monday that its members had agreed to adopt an industry-wide code of practice to reduce the spread of misinformation online.

Under the voluntary code, they commit to identifying and stopping unidentified accounts, or “bots”, disseminating content; informing users of the origins of content; and publishing an annual transparency report, among other measures.

(Reporting by Byron Kaye and Colin Packham; Editing by Sam Holmes and Hugh Lawson)

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GSK and Sanofi start with new COVID-19 vaccine study after setback

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GSK and Sanofi start with new COVID-19 vaccine study after setback 3

By Pushkala Aripaka and Matthias Blamont

(Reuters) – GlaxoSmithKline and Sanofi on Monday said they had started a new clinical trial of their protein-based COVID-19 vaccine candidate, reviving their efforts against the pandemic after a setback in December delayed the shot’s launch.

The British and French drugmakers aim to reach final testing in the second quarter, and if the results are conclusive, hope to see the vaccine approved by the fourth quarter after having initially targeted the first half of this year.

In December, the two groups stunned investors when they said their vaccine would be delayed towards the end of 2021 after clinical trials showed an insufficient immune response in older people.

Disappointing results were probably caused by an inadequate concentration of the antigen used in the vaccine, Sanofi and GSK said, adding that Sanofi has also started work against new coronavirus variants to help plan their next steps.

Global coronavirus infections have exceeded 110 million as highly transmissible variants of the virus are prompting vaccine developers and governments to tweak their testing and immunisation strategies.

GSK and Sanofi’s vaccine candidate uses the same recombinant protein-based technology as one of Sanofi’s seasonal influenza vaccines. It will be coupled with an adjuvant, a substance that acts as a booster to the shot, made by GSK.

“Over the past few weeks, our teams have worked to refine the antigen formulation of our recombinant-protein vaccine,” Thomas Triomphe, executive vice president and head of Sanofi Pasteur, said in a statement.

The new mid-stage trial will evaluate the safety, tolerability and immune response of the vaccine in 720 healthy adults across the United States, Honduras and Panama and test two injections given 21 days apart.

Sanofi and GSK have secured deals to supply their vaccine to the European Union, Britain, Canada and the United States. It also plans to provide shots to the World Health Organization’s COVAX programme.

To appease critics after the delay, Sanofi said earlier this year it had agreed to fill and pack millions of doses of the Pfizer/BioNTech vaccine from July.

Sanofi is also working with Translate Bio on another COVID-19 vaccine candidate based on mRNA technology.

(Reporting by Pushkala Aripaka in Bengaluru and Matthias Blamont in Paris; editing by Jason Neely and Barbara Lewis)

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Don’t ignore “lockdown fatigue”, UK watchdog tells finance bosses

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Don't ignore "lockdown fatigue", UK watchdog tells finance bosses 4

By Huw Jones

LONDON (Reuters) – Staff at financial firms in Britain are suffering from “lockdown fatigue” and their bosses are not always making sure all employees can speak up freely about their problems, the Financial Conduct Authority said on Monday.

Many staff at financial companies have been working from home since Britain went into its first lockdown in March last year to fight the COVID-19 pandemic.

One year on, the challenges have evolved from adapting to working remotely to dealing with mental health issues, said David Blunt, the FCA’s head of conduct specialists.

“During this third lockdown, there has been a greater impact on mental well-being, with many people struggling with job security, caring responsibilities, home schooling, bereavements and lockdown fatigue.”

Bosses should continually revisit how they lead remote teams, he said.

“The impact of COVID-19 is creating a huge workload for those considered to be high performers, while the remote environment potentially makes it much more challenging for those who were previously considered low performers to change that perception,” Blunt told a City & Financial online event.

Companies should consider “psychological safety” or ensuring that all employees feel confident about speaking out and challenging opinions.

“We’ve heard varying reports of how successful this has been,” Blunt said.

Pressures in the financial sector were highlighted this month when accountants KPMG said its UK chairman Bill Michael had stepped aside during a probe into comments he made to staff.

The Financial Times said Michael, who later apologised for his comments, had told staff to “stop moaning” about the impact of the pandemic on their work lives.

Blunt was speaking as the FCA next month completes the full rollout of rules that force senior managers at financial firms to be personally accountable for their decisions to improve conduct standards.

There have only been a “modest” number of breaches reported to regulators so far as firms worry about being “tainted” but more cases will become public as sanctions are revealed, Blunt said.

“Regulators won’t be impressed by lowballing the figures.”

(Reporting by Huw Jones; Editing by Mark Heinrich)

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